Disruptive technologies create new challenges for interest rate decisions: Poloz

Stephen Poloz said Canadians need not fear the new digital age

Disruptive technologies are making it harder to determine whether, and how quickly, to raise interest rates, the governor of the Bank of Canada said in a speech Thursday.

But Stephen Poloz said Canadians need not fear the new digital age and, in fact, he adds they are already benefiting from it, and embracing it.

“The technology is enabling growth everywhere, including in industries that have not traditionally been considered high tech,” Poloz told the Atlantic Provinces Economics Council and Greater Moncton Chamber of Commerce.

But Poloz said digital disruption, overall, is producing a positive impact on the economy.

He pointed to the computer system design sector as a prime example, noting it has grown by seven per cent annually over the past five years and now accounts for nearly two per cent of Canada’s economic output.

“To put this into context, the computer system design sector is already more important to the economy than the auto and aerospace sectors combined,” Poloz said in a speech that also noted the Canadian economy has fully recovered from the 2008 financial crisis and the 2014 oil-price collapse.

Canada also now has the world’s third-largest concentration of researchers in the field of artificial intelligence, he said, with foreign direct investment coming into the country increasingly skewed toward high tech.

Digital disruption is just as much a factor in deciding monetary policy as inflation and the ongoing concerns around global trade uncertainty, Poloz added.

But new digital technologies, in particular, could be giving the economy more room to grow before inflation pressures emerge, he said.

“Raising interest rates too quickly could choke off this economic growth unnecessarily,” the governor said, adding it makes monetary policy even more data dependent.

At the same time, uncertainty is no excuse for inaction in deciding whether to raise interest rates, Poloz said.

“What it does mean is that we will move rates toward a more neutral level gradually, continuously updating our judgement on these key issues in real time,” he said.

The Bank of Canada held its trend-setting interest rate at 1.5 per cent earlier this month but is widely expected to raise the rate at its next scheduled announcement on Oct. 24.

Terry Pedwell, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

It’s playoffs or bust for Okanagan Sun with only 4 games remaining

The Sun return to the Apple Bowl Saturday after a 38-9 win last weekend

Three people taken to hospital after a fire at Rutland home

The fire which was located on the second floor of the townhouse complex is now out

Multiple crashes, including a bus, plague Highway 97

Thursday’s evening commute in Kelowna slowed by collisions

Health minister announces new urgent care centre in Kelowna

Adrian Dix made the annoucment Thursday at the Capri Centre

Provincial Mobile Medical Unit makes an appearance in Kelowna

The high tech hospital on wheels provides medical care for rural communities and during emergencies

VIDEO: Trudeau asks Canada to look to current, not past, actions on race

Liberal leader says he never spoke about the racist photo because he was embarrassed

Historic photo: How the Okanagan River Channel came to be

Dredging in Okanagan River in Penticton started in 1908

Juno award-winning artist delivers early Christmas present to Okanagan

Chart-topping, multi-platinum artist to perform songs from new album at South Okanagan Events Centre

Fire at Kelowna home sends three to hospital

The fire which was located on the second floor of the townhouse complex is now out

Reports of chaos in Penticton, involving police cruiser and possible shots fired

Residents also reported hearing shots fired at the same time as the crash

Horvat paces Canucks to 6-1 pre-season win over Oilers

Vancouver improves to 3-1 in NHL exhibition action

Legislature gifts, clothing, travel need better control, B.C. auditor says

Audit follows suspensions of managers by Speaker Darryl Plecas

‘Really disturbing:’ Trudeau’s racist photos worry B.C. First Nation chief

Wet’suwet’en Chief concerned the photos will sow fear in Indigenous communities

‘Unacceptable’: What politicians have to say about Trudeau in blackface

Calgary Mayor Naheed Nenshi: ‘When I saw that picture last night, certainly it was a sucker-punch’

Most Read